What are some of the ways that real-world airlines price discriminate?
What will be an ideal response?
Vacation travelers are willing to pay less than business travelers, so airlines need to sort vacation travelers from business travelers. Vacation travelers generally know well in advance when their vacation will occur and so they are able to purchase their tickets in advance. In addition vacation travelers are often willing to spend a weekend at their destination. Travelers who either buy their tickets in advance and/or are willing to spend a weekend at the destination are identifying themselves as vacation travelers and airlines charge them a lower price. The airline companies make airline tickets non-transferable, preventing the vacation travelers with the lower willingness to pay from reselling their less expensive tickets to the business travelers with the higher willingness to pay.
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If another worker is hired with a marginal product greater than the previously hired worker, which of the following will be true?
A) Total costs will decrease. B) Fixed costs will decrease. C) Marginal cost will increase. D) Marginal cost will decrease. E) Average fixed costs will increase.
This question concerns the mechanism of a reserve currency standard. Two countries, X and Y, have two currencies, x and y, fixed to the reserve currency, the U.S. dollar. Suppose the exchange rate between x and the U.S. dollar is 3x per dollar
Suppose the exchange rate between y and the U.S. dollar is 5y per dollar. Explain (using numbers) the mechanism if the x-y exchange rate was 0.5 x per y.
A country will import a good only if
a. there is excess domestic quantity supplied at the world price b. domestic quantity supplied is greater than world quantity supplied c. domestic quantity demanded is less than world quantity demanded d. domestic quantity demanded is zero at the world price e. excess quantity demanded is positive at the world price
If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Which of the following is true?
A. A secure strategy for firm A is to not advertise. B. Firm A does not have a secure strategy. C. A secure strategy for firm B is to not advertise. D. None of the answers is correct.